Steelmaker ArcelorMittal confirms French furnace closures

FLORANGE, France--Steelmaker ArcelorMittal told unions on Monday it will permanently close two mothballed furnaces in northeastern France, enraging workers who blocked off access to the entire steel plant and management offices at the site.

The decision, confirmed in a company statement, is a blow to the Socialist government, which last week ordered ArcelorMittal to restart or sell the furnaces, which employ 600 of 2,700 workers at a site that is now symbolic of France's industrial decline.

Workers grouped at the Florange plant, near the German border, wept and hugged each other as management announced the decision to union leaders at a meeting in the Paris suburbs.

Some of the workers lit a fire and set up a tent at the site and vowed to stay overnight. They soldered shut the metal entrance gate to corporate offices and blocked external access to the whole site.

"For 14 months, they were telling us the closure was temporary. There is a lot of anger," local CFDT union representative Edouard Martin said at the site. "We need the government to fight alongside us and do everything it can to make Mr. Mittal stop his scrapheap strategy."

ArcelorMittal said in the statement the permanent closure of the furnaces, which were shut off in July and October 2011 due to a lack of demand, would affect some 629 jobs. The company said it would seek to move workers to new jobs.

While ArcelorMittal Chief Executive Lakshmi Mittal has given his consent to finding a buyer, allowing France two months to do so, the issue lies with flagging demand, largely from the stagnant auto sector, which is not likely to revive any time soon.

"There will never be a sale. The plant is no longer viable," said FO union representative Walter Broccoli.

Industry insiders say that the blast furnaces at the site are not viable at times of weak demand due to their small size and their distance from the coast, making the transport of raw materials more expensive.

The slump in activity in the industrial belt around Florange is weighing on unemployment, which rose in August to above the 3 million level for the first time since mid-1999.

While the rest of the Florange plant is operational, President Francois Hollande put the endangered furnaces on the political map by visiting the site during his election campaign earlier this year.

With rampant unemployment a major factor in a drop in his approval ratings to as low as 43 percent, he met personally with Mittal last week to urge him to rethink the closure.

Industry Minister Arnaud Montebourg had said on Sunday the government was seeking contacts with leading steelmakers.